Many local authorities have now declared climate emergencies and the reduction of carbon emissions will be a key driver for authorities to become more involved in the clean energy sector.

However, for many local authorities the challenge comes in determining a route that provides the right operational model and negates the complexities of developing clean energy schemes in a subsidy-free era.

Some authorities will have an appetite to own their own energy assets, most obviously in the form of solar PV installations on the ground, on the rooftops of existing buildings or as solar canopies over car parks.

As the asset owner, the authority will have the option of generating its own income through selling power under a power purchase agreement (PPA). As the price achievable under a PPA will likely differ according to whether power can be sold under an on-site or private wire PPA arrangement or just sold to the grid, a key consideration will be to explore the scope for matching generation to local / on-site demand.

Some authorities will prefer to outsource the development of energy assets to private sector developers. In these situations, there may be scope for the authority to lock-in favourable energy prices on a long term basis through entering into PPAs with the developer. Alternatively, the authority might simply be looking to secure a long term rental income from land leased to the developer.

Developing a long-term partnership with a clean energy developer could also be beneficial when considering the development of complex schemes which combine multiple assets.

Take for example Peterborough City Council who recently announced its plans to host the UK’s largest smart, low-carbon city energy system – a £2 million scheme which will see additional solar and energy-from-waste electricity generation capacity installed across the city-region. In order to develop this scheme, the local authority is working with SSE’s Enterprise arm, consultancies Element Energy and Sweco UK, Cranfield University and software provider Smarter Grid Solutions.

Equally, local authorities may want to consider a more limited partnership whereby the clean energy developer undertakes the development and financing of the project before handling it on to the Council on completion.

Warrington Borough Council’s partnership with GRIDSERVE is a good example of this. Not only have they completed a subsidy free 34.7 MW solar farm in York which combines generation with 30 MWh of battery storage to maximise revenues and help balance the grid, they’re also developing a second 25.7MWp solar farm at Hull.

Another consideration will be how to address increasing future demand for electric vehicle (EV) charging facilities at a range of different sites, with different use cases. Some sites might have a requirement for rapid charging facilities whereas at other sites such as staff car parks or overnight parking areas for fleet vehicles, slower capacity chargers may be more appropriate.

In each case a key challenge will be securing a sufficient supply of low carbon electricity while taking into account any constraints imposed by a lack of grid capacity. With this in mind, we would expect to see more local authorities looking, wherever possible, to locate solar or other forms of clean energy generation with EV charging facilities.

In many cases, there may also be a benefit from layering in battery storage to help manage peaks in charging demand and optimise the use of locally generated electricity.

Projects involving EV charging facilities might also be taken forward and owned by authorities themselves with a view to generating income directly from the provision of EV charging services. Alternatively, we anticipate many authorities choosing to involve private sector partners to operate facilities of this kind on a concession basis – inevitably meaning a lower upside in terms of income generation, but also less risk for the authority.

For example, Devon County Council has formed a consortium with two private sector companies, ZAPINAMO and Gamma Energy, to install and operate 150 electric car charge points in Exeter.

As local authorities look to develop business cases for renewable energy generation assets which will provide them with different revenue streams, we’re seeing an increasing requirement for expert advice from clean energy developers and other sector operators to identify suitable locations for solar, EV charging and other facilities and to assess the business case associated with different project structures. 

By Gary Roscoe, partner, and Stuart Urquhart, legal director, at UK law firm TLT